10-Q: HUMBL Shifts to Mining, Reports Q2 Loss & Asset Sale Gain

HUMBL, Inc. has fundamentally reshaped its business, divesting its Web3 assets and acquiring a Brazilian magnesium silicate mining operation, while reporting a net income driven by the asset sale despite ongoing operational losses.

Summary

• The company completed a major business pivot, selling its HUMBL.com assets to WSCG, Inc. and acquiring 99% of FinCapital Credito Pagamentos e Servicos LTDA, a Brazilian company with magnesium silicate mineral assets.
• The sale of HUMBL.com assets resulted in a significant gain on disposal of $16,835,929.
• Net income for the six months ended June 30, 2025, was $9,253,587, a substantial improvement from a net loss of $(2,904,664) in the prior year period, primarily due to the gain on asset disposal.
• Despite the overall net income, continuing operations reported a net loss of $(7,618,686) for the six months ended June 30, 2025, worsening from a loss of $(1,388,498) in the same period last year.
• Working capital deficit significantly improved to $(7,721,338) as of June 30, 2025, from $(23,693,753) at December 31, 2024, driven by the WSCG HoldCo investment and liability reductions.
• Cash balance increased to $125,549 as of June 30, 2025, from $20,487 at December 31, 2024.
• The company's authorized common stock was increased to 85,000,000,000 shares.
• Management has determined there is substantial doubt about the company's ability to continue as a going concern due to operating losses and working capital deficit.
• Two shareholder derivative class action lawsuits remain ongoing.

Sentiment

Score: 3

Explanation: The company reported a net income driven by a one-time asset sale, but continuing operations show a significantly increased net loss, and management has issued a 'going concern' warning. The radical business pivot to mining introduces high uncertainty and execution risk, compounded by ongoing legal issues and internal control deficiencies.

Positives

• Achieved a net income of $9,253,587 for the six months ended June 30, 2025, primarily due to a $16,835,929 gain on the disposal of discontinued operations (HUMBL.com assets).
• Working capital deficit significantly reduced to $(7,721,338) as of June 30, 2025, from $(23,693,753) at December 31, 2024.
• Cash balance increased to $125,549 as of June 30, 2025, from $20,487 at December 31, 2024.
• Successfully divested non-core Web3 assets, streamlining the business model.
• Acquired 41,500 tons of magnesium silicate with a book value of $20,000,000, establishing a new business focus in raw materials.

Negatives

• Net loss from continuing operations increased significantly to $(7,618,686) for the six months ended June 30, 2025, compared to $(1,388,498) for the same period in 2024.
• Professional fees increased to $851,402 for the six months ended June 30, 2025, from $638,586 in the prior year.
• Incurred a $450,000 settlement expense in the six months ended June 30, 2025.
• Interest expense surged to $(1,289,747) for the six months ended June 30, 2025, from $(401,344) in the prior year.
• Recognized a new loss on investee of $(616,802) related to WSCG HoldCo.
• Derivative liabilities significantly increased to $1,277,291 as of June 30, 2025, from $338,986 at December 31, 2024.
• Incurred new derivative expense of $(638,397) for the six months ended June 30, 2025.
• Loss on conversion of convertible notes payable increased to $(753,856) for the six months ended June 30, 2025, from $(678,715) in the prior year.
• Incurred losses on exchange of warrants to common stock ($109,329) and Series C Preferred Stock to common stock ($660,500).
• The joint venture agreement with Multicortex, LLC, entered into on April 3, 2025, was terminated on July 21, 2025, with shares issued for the venture in process of being cancelled, indicating a failed initiative.

Risks

• Management has determined there is substantial doubt about the company's ability to continue as a going concern due to operating losses and a working capital deficit.
• Despite improved working capital, a significant portion of current liabilities (including $20,000,000 for FinCapital acquisition shares) are expected to require cash settlement.
• The company continues to incur significant net losses from continuing operations, indicating that the new business model has not yet achieved profitability.
• Two ongoing shareholder derivative class action lawsuits allege federal securities law violations, false or misleading statements, and sales of unregistered securities, seeking unspecified monetary damages. One amended complaint was filed after a motion to dismiss was granted without prejudice.
• The company has completely pivoted from Web3 technology to a holding company model focused on raw materials/mining, which is a significant change with inherent execution risks.
• The company anticipates entering into profitable businesses upon the sale of magnesium silicate, but there is no guarantee of an adequate transaction or successful monetization.
• The company plans to issue an additional $16,000,000 in common shares for the FinCapital acquisition, contingent on a recapitalization event providing sufficient authorized shares, which could lead to significant dilution.
• Disclosure controls and procedures were deemed not effective as of June 30, 2025, raising concerns about the reliability of financial reporting and timely disclosure.

Future Outlook

The company will no longer pursue Web3 and related technologies for the 2025 fiscal year, instead adopting a holding company model focused on owning and operating various subsidiaries, particularly in Brazil and Latin America. FinCapital, with its magnesium silicate assets, will be the first business under this new structure, and the company is actively seeking to sell the magnesium silicate and acquire other raw materials or mining interests. Management anticipates entering into profitable businesses upon the sale of the magnesium silicate and plans to find and acquire undervalued assets and businesses in North and South America, with a particular focus in Brazil. Professional fees are expected to decrease due to scaling back on outside contract labor but may increase during the transition out of the HUMBL.com business.

Management Comments

• Our CEO, Thiago Moura, is an experienced entrepreneur with deep connections in Brazil and throughout Latin America.
• Our plan is to find and acquire undervalued assets and business in North and South America, with a particular focus in Brazil, and then operate those businesses as subsidiaries under our corporate umbrella.
• We expect our professional fees to continue to decrease in our next 12 months as we look to scale back on outside contract labor due to the change in our business operations as the variance related mostly to the settlement made in the amount of $450,000.
• We expect that these costs will increase during the remainder of 2025 as we transition out of the HUMBL.com business.
• Management has determined that there is substantial doubt about the Company's ability to continue as a going concern.

Industry Context

The company is undergoing a radical shift from a technology-focused Web3 and financial services business (HUMBL.com, BLOCK ETXs) to a diversified holding company model with an initial focus on raw materials and mining in Brazil and Latin America. This move positions the company away from the highly competitive and volatile Web3 space towards more traditional asset-based industries, leveraging the controlling shareholder's (Ybyr Capital S.A.) expertise and connections in mining, real estate, and oil and gas in the region. This is a complete departure from its previous industry.

Comparison to Industry Standards

• Direct comparison to industry standards is challenging given the company's complete pivot from a Web3/fintech focus to a holding company model with an initial asset in magnesium silicate mining.
• The company's previous operations in Web3, mobile wallets, and blockchain services were in a highly competitive and rapidly evolving sector, where profitability has been elusive for many participants.
• The new focus on magnesium silicate mining places the company in the industrial raw materials sector, which has different market dynamics, supply chains, and profitability drivers.
• The company's current state, marked by significant operating losses from continuing operations and a 'going concern' warning, indicates it is far from meeting profitability or operational efficiency benchmarks typical of established companies in either the tech or mining sectors.
• The acquisition of FinCapital's magnesium silicate asset for $20,000,000 in common shares, and the subsequent plan to monetize this asset, suggests a speculative venture rather than a proven business model comparable to established mining companies.

Management Changes

Corporate Governance

Legal Proceedings

• Shareholder derivative class action lawsuit (Matt Pasquinelli and Bryan Paysen v. HUMBL, LLC, et al.) alleging federal securities law violations, false/misleading statements, and sales of unregistered securities. The court dismissed the initial complaint without prejudice on March 27, 2025, but plaintiffs filed an amended complaint on April 10, 2025, and a motion to dismiss the amended complaint is pending.
• Shareholder derivative class action lawsuit (Mike Armstrong, derivatively on behalf of HUMBL, Inc. v. Brian Foote, et al.) alleging similar claims as the Pasquinelli litigation. This case is currently stayed.

Related Party Transactions

• Outstanding balance of $24,549 owed to WSCG for advances above credit card charges.
• Repaid $404,711 in related party notes and $750,000 in related party notes payable during the six months ended June 30, 2025.
• Received $12,000 at 6% interest from a trust related to a director on January 21, 2025, which was repaid in April 2025.
• Issued 1,500,000,000 shares of common stock in a settlement valued at $450,000 with BRU, LLC.
• Granted BRU approximately 10% of its holdings in WSCG HoldCo in August 2025 as part of a settlement, resulting in a $1,621,171 loss.
• Issued 800,000,000 shares of common stock in July 2025 in conversion of $100,000 in convertible notes payable to related parties, resulting in a $140,000 loss.

Stakeholder Impact

• Shareholders face significant dilution risk from past and future common stock issuances, especially the $16,000,000 in common shares for FinCapital. The business pivot introduces high uncertainty regarding future value. The 'going concern' warning indicates a risk of complete loss of investment.
• Employees may experience job impacts or changes in roles due to the shift in business model and reduction in general and administrative expenses.
• Former customers of HUMBL.com services are now served by WSCG, Inc., indicating a complete cessation of direct service provision by HUMBL.
• Creditors face concerns about repayment capacity due to significant current liabilities, including a $20,000,000 liability for stock to be issued, and substantial debt from both unrelated and related parties, despite some debt reductions.
• The business pivot likely means a change in the types of suppliers the company will engage with, with unclear impact on existing supplier relationships.

Next Steps

• Sell the acquired magnesium silicate asset.
• Acquire other raw materials or mining interests.
• Find and acquire undervalued assets and businesses in North and South America, particularly Brazil, to operate as subsidiaries.
• Address the substantial doubt about the ability to continue as a going concern.
• Continue to defend against ongoing shareholder derivative class action lawsuits.
• Complete the issuance of the remaining $16,000,000 in common shares for the FinCapital acquisition following a recapitalization event.
• Improve disclosure controls and procedures.

Key Dates

Recommendation

The company faces substantial doubt about its ability to continue as a going concern, evidenced by persistent operating losses from continuing operations. While a one-time asset sale generated net income, the core business remains unprofitable and highly speculative following a radical pivot from Web3 to mining. Significant dilution is ongoing and expected, and internal control deficiencies coupled with active litigation further increase investment risk. The future success hinges on monetizing a single mineral asset and acquiring other undervalued assets, which is highly uncertain.

Keywords

Magnesium Silicate, Mining, Raw Materials, Brazil, Latin America, Holding Company, SEC Filing, 10-Q, Financial Results, Business Pivot, Discontinued Operations, Going Concern, Convertible Notes, Shareholder Lawsuit, Corporate Restructuring